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Origination | Ep. 10

The LoanBoss Team Jul 28, 2021 9:47:00 AM

JP Conklin joins Mordecai Rosenberg, President of Greystone's lending arm, to discuss his businesses and innovation. 

LoanBoss is a debt management software that allows a client to get a full dashboard of all of their debt to understand what their prepayment penalties are, to understand what their exposure is to different lenders. The interesting thing is that JP is selling to a lot of the same target clients that we are as originators, investment sales, and brokers and yet he's taken a different path.


Tell us a little bit about LoanBoss, what it is and what you do.

It's a debt management platform for commercial and multifamily real estate. It arose out of our own needs, I own another company Pensford, which is an interest rate advisory firm and we found that we were rerunning the same calculations and analysis over and over again and we thought well maybe we should build a tool that will allow commercial real estate borrowers and brokers to tinker with the analysis and do it themselves. They like to mess with the inputs themselves. But that creates a very inefficient process where you email me, I email you a response. And we thought, well we have to be able to automate this.

We realized there wasn't a really good debt management tool out there, and we changed directions and said we need to build a platform that centralizes and automates all of the data and calculations that go into a loan closing, into debt transaction, and put that under one umbrella. And the best example I can give you is prepayment penalties. When you sign the paperwork, you know all of the math needed to calculate the prepayment penalty from now until maturity; yet we all run to an online calculator and start over from scratch every single time. That's insanity!

That sort of approach is what led to the creation of LoanBoss. Let's automate all of that stuff.

In our industry, the first 98% of what we do can mostly be automated. Our expertise is really in the last 2%. That's where our expertise, judgment, experience, and our wisdom all come in. Our connections. The first 98% is where we spend all of our time, compiling information, double checking, we're making sure it's all right just to get to the last 2%. Let's automate the first 98% so we can spend all of our energy on the last 2%. Think about how much we could amplify. Our productivity, if that's all we did, if all I did was the last 2%, my business could quadruple in a year. That's what LoanBoss is bringing to the table for commercial real estate firms. 


Give me an example of the 98%. What are the capabilities that they have, what's the work they don't have to do? 

Take it a step further and ask "what is my cash out like" on every single deal. We've got loan sizing tools, we've got assumptions that you can customize, we've got all of your cashflows from your existing deals, we've got cap rates and NOI. You can instantly see today to the next 36 months what your projected cash out is gonna look like. It didn't take any amount of time, there was no effort. It was already there, you just get into the boardroom and start talking about the potential outcomes. Use the expertise you've gained with a lifetime in the industry to make the best decision for you, automate the first 98% that got you to having the meeting in the first place. A more mundane one is the Schedule of Real Estate Owned. That's an incredibly manual process that should be automated. There's no excuse for that to not be automated.


Who within the firm is typically the person you're trying to get to?

One of the beautiful thing for LoanBoss is it's meant to make the debt cycle easier on everyone at the firm. 

Everyone has a different use case... (For example)

Asset Managers — the heaviest user. 

Accounting — hates having to pull loan docs because that's not their thing. So giving them a PDF link inside of LoanBoss that takes them right to the section and opens up a drawer that says "here's the exact verbiage in the loan document", all you needed was one click.  

Originators — gather term sheets and analyze 5yr vs 10yr vs 3+1+1, they can analyze all those instantly and see projected interest expense and IRRs on those numbers.

We ended up giving more weight to the borrowers because as a startup, we needed to be able to get a yes. Broker shops and lenders have a much slower cycle and a lot more bureaucracy to get through. We punted and said let's make this perfect for borrowers first and then we'll come back and make sure we button it up for lenders and servicers but it's already going to do 90% of what they wanted it to do anyway.


There's this notion that you don't need salespeople, that technology will replace them. You have salespeople that are afraid of technology and reluctant to employ it in their business because there is a fear of "am I going to eliminate the value that I bring to the equation".

What are your thoughts on what technology does for salespeople, does it ever eliminate a salesperson in our business?

The dirty little secret in Commercial Real Estate is that we benefit from inefficiency in some way. A lot of times, we pride ourselves in getting the deal done using back door channels or information that I have that somebody else doesn't have. Or calling somebody like "we're off the record here but where does this bid need to be in order to get this done?" and I associate that with my value. So there is this inherent friction with adopting technology that might make information flow more smoothly because you are now stripping me of the thing that is keeping me employed and making money. So I totally understand where salespeople are coming from. 

1. If your job security is tied up in slowing the adoption of technology, you're eventually going to get steamrolled anyway. That is coming no matter what. You might as well make it part of your routine and be one of the people that brings about that change instead.

2. What I always reassure people is that there is no way technology can replace that human element an amazing salesperson has. Technology can't replace that. It's not meant to disrupt, that's why they're fearful of it, they think it's going to be disruptive. It's not, it's meant to enhance, it's meant to improve what you're already doing and allow you to do more of what you're so good at. 


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